LONDON/JERUSALEM, Feb 9 : A historic shake-up of the Middle East is starting to draw international investors, warming to the prospects of relative peace and economic recovery after so much turmoil.
President Donald Trump's proposal that the US take over Gaza may have thrown a curveball into the mix, but the fragile ceasefire in the Israel-Hamas war,Bashar al-Assad's ouster from Syria, a weakened Iran and a new government in Lebanon have fed hopes of a reset.
Egypt, the region's most populous country and a key negotiator in the recent peace talks, has just managed its first dollar debt sale in four years. Not too long ago it was facing economic meltdown.
Investors have started buying up Israel's bonds again, and those of Lebanon, betting that Beirut can finally start fixing its intertwined political, economic and financial crises.
"The last few months have very much reshaped the region and set in play a very different dynamic in a best-case scenario," Charlie Robertson, a veteran emerging market analyst at FIM Partners, said.
The question is whether Trump's plan for Gaza inflames tensions again, he added.
Trump's call to "clean out" Gaza and create a "Riviera of the Middle East" in the enclave was met with international condemnation.
Responding to the uproar, Egypt said on Sunday it would host an emergency Arab summit on February 27 to discuss what it described as "serious" developments for Palestinians.
Credit rating agency S&P Global has signalled it will remove Israel's downgrade warning if the ceasefire lasts. It acknowledges the complexities, but it is a welcome possibility as Israel readies its first major debt sale since the truce was signed.
Share dropped from 15% to below 9%, debt load has risen from 540 bln to almost 720 billion.
Michael Fertik, a US venture capitalist and CEO of artificial intelligence firm Modelcode.ai, said the easing of tensions had contributed to his decision to open an Israeli subsidiary.
He is eager to hire skilled local software programmers, but geopolitics have been a factor too.
"With Trump in the White House, no one doubts the United States has Israel's back in a fight," he said, explaining how it provided predictability even if the war re-ignites.
Having largely stayed away when Israel ramped up spending on the war, bond investors are also starting to come back, central bank data shows. �REUTERS
